CONTRACTS

An Interest in Music Requires Building and Maintaining Your Music Collection So then why would anyone say that it is illegal to download music from the internet? It is available on the computer, why not use that instead of buying CD’s when it would save you money? What are your thoughts on downloading for free?

WHAT IS A CONTRACT

A CONTRACT IS--- ANY AGREEMENT ENFORCEABLE BY LAW

DID YOU KNOW??? YOU HAVE ALREADY MADE HUNDREDS OF CONTRACTS

EVERY TIME YOU BUY SOMETHING NEW AT THE STORE, RENT A VIDEO, BUY A CD, PURCHASE A CELL PHONE, INSTALL A NEW PROGRAM ON YOUR COMPUTER, ETC. ETC.

SOME COMMON TYPES OF CONTRACTS--- A MOVIE TICKET A CONCERT TICKET A TICKET TO A SPORTING EVENT Contract terms and conditions are often listed on the ticket. A typical condition states that you may not resell the ticket at a price greater than its face value (scalping)

WE ALL NEED TO KEEP OUR MP3 PLAYERS UP TO DATE WITH OUR FAVORITE SONGS! It’s not fair that I am told I can’t download the music off the internet. I can spend my money on other things by doing that and not wasting money on CD’s. I only like a couple of songs on them anyway. There is nothing wrong with downloading from the computer and who is it hurting anyway?? Your opinion on this?

SIX ELEMENTS MAKE UP A CONTRACT OFFER 2.ACCEPTANCE 3.GENUINE AGREEMENT 4.CAPACITY 5.CONSIDERATION 6.LEGALITY

OFFER…… A PROPOSAL BY ONE PARTY TO ANOTHER INTENDED TO CREATE A LEGALLY BINDING CONTRACT

ACCEPTANCE…… THE UNRESTRICTED WILLINGNESS TO GO ALONG WITH THE OFFER

GENUINE AGREEMENT… OCCURS IF VALID OFFER (OFFER MADE WITHOUT FRAUD, UNDUE INFLUENCE, MISREPRESENTATION) IS MET BY A VALID ACCEPTANCE

CAPACITY….. THE LEGAL ABILITY TO ENTER A CONTRACT. THE LAW MAKES A GENERAL ASSUMPTION THAT ANYONE ENTERING A CONTRACT HAS CAPACITY. THIS, HOWEVER, CAN BE DISPUTED

CONSIDERATION….. THE EXCHANGE OF THINGS OF VALUE THAT CREATES THE BOND BETWEEN THE PARTIES TO THE CONTRACT

LEGALITY…. PEOPLE ENTERING INTO CONTRACTS CANNOT BE PERMITTED TO AGREE TO DO ILLEGAL ACTS

IN ORDER FOR A CONTRACT TO BE LEGALLY COMPLETE…. ALL SIX ELEMENTS MUST BE INCLUDED— IF NOT, THE CONTRACT DOES NOT EXIST!!

CHARACTERISTICS OF A CONTRACT— THE FOUR CATEGORIES

VALID, VOID, VOIDABLE, UNENFORCEABLE VALID—MEANS LEGALLY GOOD. THUS, A VALID CONTRACT IS ONE THAT IS LEGALLY BINDING. VOID—MEANS NO LEGAL FORCE. A VOID CONTRACT AMOUNTS TO NOTHING AND HAS NO LEGAL EFFECT. VOIDABLE—WHEN ONE PARTY IS ABLE TO VOID OR CANCEL A CONTRACT FOR A LEGAL REASON. UNENFORCEABLE—WHEN A CONTRACT IS NOT ENFORCEABLE BECAUSE OF A RULE THAT CANNOT BE ENFORCED IN COURT. Ex. Statute of Limitations

EXAMPLE On March 17, 1991, Trevor Martin agrees to buy Natalie Anderson’s CD collection for $410. The agreement is never put in writing. Natalie is to deliver the CD’s on March 20, 1991 and Trevor is to make payment on March 25, Natalie delivers the CD’s, but Trevor does not pay, pleading financial hardship. Natalie refuses to extend the time period and Trevor refuses to pay. On March 25, 1996, Natalie files a suit. In Natalie’s state the statute of limitations for enforcement of contracts for the sale of goods is four years. Since five years have passed, Natalie’s contract is unenforceable.

EXPRESS, IMPLIED EXPRESS CONTRACT—STATED IN WORDS AND MAY BE EITHER ORAL OR WRITTEN. IMPLIED CONTRACT—A CONTRACT THAT COMES ABOUT FROM THE ACTIONS OF THE PARTIES—A SINGLE WORD MAY NOT BE SPOKEN

EXAMPLE Herb Schneider drives into a self-service gas station that requires payment before the attendant will turn on the pump. Herb walks into the station and hands the attendant a twenty dollar bill. He returns to his car and pumps $20 worth of gas into the tank. He then drives off. Neither party spoke a single word, yet an implied contract arose by their actions.

BILATERAL, UNILATERAL BILATERAL CONTRACT-CONTAINS TWO PROMISES—ONE BY EACH PERSON. ONE PERSON PROMISES TO DO SOMETHING IN EXCHANGE FOR THE OTHER PERSON’S PROMISE TO DO SOMETHING. ****PROMISE FOR A PROMISE**** UNILATERAL CONTRACT-CONTAINS ONE PROMISE ONLY. ONE PERSON PROMISES TO DO SOMETHING IF AND WHEN THE OTHER PERSON PERFORMS SOME ACT. ****PROMISE FOR AN ACT****

EXAMPLE A REWARD IS THE MOST COMMON INSTANCE OF THIS KIND OF CONTRACT *************************** Mrs. Novak places an ad offering a reward of $50 for the return of her lost ring. Placing the ad offering a reward does not create a contract. The contract would not come into existence until someone returns the ring. At that point, Mrs. Novak will owe the finder $50.

ORAL, WRITTEN ORAL CONTRACT--CREATED BY WORD OF MOUTH—COMES INTO EXISTENCE WHEN TWO OR MORE PEOPLE SPEAK TO EACH OTHER. MOST COMMON TYPE OF CONTRACT. WRITTEN CONTRACT—PUT INTO WRITING TO ALLOW PARTIES TO KNOW THE EXACT TERMS OF THE CONTRACT AND PROVIDE PROOF THAT THE AGREEMENT WAS MADE.

STATUTE OF FRAUDS REQUIRES THAT CERTAIN CONTRACTS MUST BE EVIDENCED BY A WRITING TO BE ENFORCEABLE. ************************ **CONTRACTS TO PAY THE DEBTS OF OTHERS **CONTRACTS BY EXECUTORS AND ADMINISTRATORS OF ESTATES TO PAY DEBTS OF DECEASED PERSONS OUT OF THEIR OWN POCKETS **CONTRACTS REQUIRING MORE THAN A YEAR TO PERFORM **CONTRACTS IN CONSIDERATION OF MARRIAGE **CONTRACTS TO SELL AN INTEREST IN REAL PROPERTY **CONTRACTS FOR THE SALE OF GOODS VALUED AT $500 OR MORE

REQUIREMENTS OF AN OFFER--- PERSON MAKING THE OFFER—OFFEROR PERSON TO WHOM OFFER IS BEING MADE—OFFEREE

AN OFFER HAS THREE BASIC REQUIREMENTS--

1.SERIOUS INTENT AN OFFER MUST BE MADE WITH THE INTENTION OF ENTERING INTO A LEGAL OBLIGATION *************** AN OFFER MADE IN THE HEAT OF ANGER OR AS A JOKE WOULD NOT MEET THIS REQUIREMENT ********* Ex.—When complaining about your car you say, “Give me five bucks and it’s yours”.

INVITATIONS TO NEGOTIATE AN INVITATION TO DEAL, TRADE OR MAKE AN OFFER— sellers have limited merchandise to sell and can’t sell an advertised product to everyone who sees an ad. Advertisements in Newspapers, magazines and catalogs Often confused with Genuine Offers Price tags, signs in store windows and on counters and prices marked on merchandise are invitations to negotiate

If customers say they would like to buy an advertised item, they are making an offer to buy the item at the advertised price. The storeowner is then free to accept or reject the offer. There are exceptions to this rule.

The courts consider some advertisements as offers when they contain specific promises, use phrases such as “first come, first served,” or limit the number of items that will be sold. In such cases, under the terms of the advertisement, the number of people who can buy the product becomes limited, making the advertisement an offer rather than an invitation to negotiate.

2. DEFINITENESS AND CERTAINTY AN OFFER MUST BE DEFINITE AND CERTAIN TO BE ENFORCEABLE *********** Ex. Joe was offered a position as an account executive with his company. He was to receive $2,400 a month pay plus a “reasonable” commission on total sales. This is not a definite and certain offer because it is hard to determine what a “reasonable” commission is. The court could fix a commission based upon general practices of the trade.

3. COMMUNICATION TO THE OFFEREE OFFERS MAY BE MADE BY TELEPHONE, LETTER, TELEGRAM, FAX AND OTHER METHODS, BUT TO BE EFFECTIVE IT MUST BE COMMUNICATED TO THE OFFEREE ***************** Ex. Jean found a wallet and returned it after looking at the driver’s license. She returned the wallet and the owner thanked her. When Jean was reading the paper that evening she discovered that the owner had offered a reward for the return of the wallet. Jean cannot legally go to the man and try to collect the reward because the offer had not been communicated to her. She did not know about the reward at the time she returned the wallet so it cannot be said that the offer was communicated to her.

Requirements of an acceptance

UNCONDITIONAL ACCEPTANCE THE ACCEPTANCE MUST NOT CHANGE THE TERMS OF THE ORIGINAL OFFER MIRROR IMAGE RULE-ACCEPTANCE NEEDS TO MIRROR OFFER ANY CHANGE IN TERMS MEANS THE OFFEREE HAS NOT REALLY ACCEPTED THE OFFER ANY CHANGE IS A COUNTEROFFER SO ORIGINAL OFFEROR IS NOT OBLIGATED TO GO ALONG WITH THAT COUNTEROFFER AND NO CONTRACT RESULTS

METHODS OF ACCEPTANCE THE TIME AT WHICH AN ACCEPTANCE TAKES EFFECT IS IMPORTANT BECAUSE THAT IS WHEN A CONTRACT COMES INTO EXISTENCE. ***WHEN ONE PARTY SPEAKS AND THE OTHER HEARS THEY THEN COMMUNICATE THE ACCEPTANCE OF AN OFFER ***IF OFFEREE USES SAME METHOD OF COMMUNICATION THE OFFEROR USED, THE CONTRACT COMES INTO EXISTENCE WHEN THE ACCEPTANCE IS SENT ***IF OFFEREE USES DIFFERENT METHODS OF COMMUNICATION FROM OFFEROR, THE CONTRACT COMES INTO EXISTENCE WHEN THE ACCEPTANCE IS RECEIVED.

TERMINATING AN OFFER

REVOCATION REVOCATION IS THE TAKING BACK OF AN OFFER BY THE OFFEROR BEFORE IT HAS BEEN ACCEPTED ****TWO RULES GOVERN REVOCATION**** 1.AN OFFER CAN BE REVOKED ANYTIME BEFORE IT IS ACCEPTED 2.REVOCATION BECOMES EFFECTIVE WHEN IT IS RECEIVED BY OR COMMUNICATED TO THE OFFEREE

REJECTION REJECTION, OR REFUSAL, OF AN OFFER BY THE OFFEREE BRINGS THE OFFER TO AN END

COUNTEROFFER A COUNTEROFFER ENDS THE FIRST OFFER NO NEW OFFER COMES INTO EXISTENCE UNLESS THE ORIGINAL OFFEROR ACCEPTS YOUR NEW OFFER

EXPIRATION OF TIME IF THE OFFEROR PUTS A TIME LIMIT FOR THE ACCEPTANCE IN THE OFFER, IT MUST BE MET. IF NO TIME FOR ACCEPTANCE IS STATED IN THE OFFER THEN IT MUST BE ACCEPTED IN A REASONABLE TIME, OTHERWISE, NO CONTRACT EXISTS.

OPTION CONTRACT WHEN AN OFFEREE PAYS MONEY OR OTHER CONSIDERATION TO AN OFFEROR TO HOLD AN OFFER OPEN FOR AN AGREED PERIOD OF TIME. THIS IS A BINDING PROMISE TO HOLD AN OFFER OPEN FOR A SPECIFIED PERIOD OF TIME.

DEATH OR INSANITY IF THE OFFEROR DIES OR BECOMES INSANE BEFORE THE OFFER IS ACCEPTED, THE OFFER COMES TO AN END